9/20/2012

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Background Checks Under Fire:

Is Your Screening Process at Risk?

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9/20/2012

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Presenter

Angela Bosworth, JDVice President of Compliance and General Counsel, EmployeeScreenIQ

abosworth@employeescreen.comangela43215@gmail.comTwitter: @angelabosworthLinkedIn: www.linkedin.com/in/angelabosworth

Angela is an attorney with 23 years of practice in hiring issues, privacy, EEO law, FCRA and state regulatory issues surrounding the background screening and hiring process. 

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Current Climate• US Bureau of Labor Statistics: 15 million Americans unemployed,

8.3% unemployment according to August 2012 jobs report• 8.2 million people are working part-time involuntarily. An additional

2.5 million want to work and are available for work, but have given up their search. Together, this means that 23.6 million are either unemployed or underemployed, resulting in a “real” unemployment rate of 15.0 percent.

• The average unemployed person is out of work for 38.8 weeks, or for over 9 months.

• Only 2.8 million available jobs• 4-10 people applying for every job (not including currently employed

who are seeking new or better jobs)• Recovery from recession has been slow and these estimates are

conservative

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So Many Applicants

• Pressure on recruiters/employers to screen hundreds of applicants for one opening

• Employers have narrowed their sourcing methods

• Companies are afraid to use broad distribution services

• Some don’t even post jobs and go only to one networking site—for example, a hiring manager’s alumni association, Linked In

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So Many Applicants (cont.)

• Employers seek ways to streamline the process

• Automation through Applicant Tracking Systems

• Lax compliance with Fair Credit Reporting Act requirements for written consent, adverse action notices

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Rejected Applicants Fight Back

• A rejected job seeker has 180 to 300 days to file a charge with the Equal Employment Opportunity Commission (EEOC)

• EEOC and Plaintiff’s attorneys are filing record number of cases

• FCRA related lawsuits on the rise

• Plaintiff’s attorneys are actively seeking claimants

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Compliance Landscape

FCRA

Risk

Man

agem

ent

Negligent Hiring

Legi

slat

ion

Discrimination

LitigationLawsuits EE

OC

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The Legal Claims

Potential Legal Claims Include:

EEO Law

• Discriminatory hiring practices under Title VII

• “Failure to hire”

• Class actions claiming disparate impact

• “Ban the Box”

FCRA

• Statutory Claims under the FCRA

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Discrimination Claims and the EEOC

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Consequences of Narrowing the Pool of Potential Applicants

• Can lead to an unbalanced field that lacks racial diversity

• Can lead to homogenous pools• Unintended impact: • The unemployment rate for blacks and African

Americans, at 14.1 percent, is nearly double the rate for whites (7.4 percent); moreover, the share with a job is 52.8 percent, 6.4 percentage points below the share for whites.

• Blacks: 14.1%• Hispanics: 12.2%• Whites: 7.4%

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Title VII of the Civil Rights Act of 1964

• Prohibits discrimination in employment based on race, gender, national origin, and other protected classes

• Two types of discrimination in employment:• Prohibits employers from making hiring decisions

based on race• Prohibits employers from using selection

procedures that have “Disparate Impact” • Enforced by the Equal Employment Opportunity

Commission

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EEOC Weighs In

• EEOC Guidance: “an absolute bar to employment” (“blanket policies”)based on the fact that an individual has had a criminal conviction is “unlawful” under Title VII

• EEOC’s 2012 Strategic Plan: Main focus is on enforcement of disparate impact, systemic discrimination cases.

• Over 100 cases currently pending where claims are based on alleged unlawful practices in the use of criminal background checks

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EEOC E-RACE

• Eradicating Racism and Colorism from Employment (http://www.eeoc.gov/eeoc/initiatives/e-race/index.cfm)

• Focused on eliminating barriers to employment

• Targets use of credit, systemic discrimination, as well as criminal history

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EEOC Political Landscape

5 Commissioners

Chair Jacqueline Berrian appointed in 2010 with a mandate to aggressively pursue E-Race agenda and investigate claims of systemic discrimination and disparate impact.

• 2 Republican appointees: Lipnick and Barker

• 3 D’s: Ishamoru, Berrian, Feldblum

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Disparate Impact

• Definition:

• When an employer’s decision making or selection process is neutral on it’s face, but has an adverse impact on a protected class under Title VII

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Relevant Cases• Green v. Missouri Pacific Railroad (1975) • El v. SEPTA (2007) :Plaintiff was denied job due to a “bright

line” policy. 40 yr. old gang related homicide conviction. Court upheld SJ for the employer saying plaintiff did not produce sufficient evidence. Mixed result for employers.

• Hudson v. First Transit (settled 2011): school bus transportation giant settled class action claim alleging a blanket policy

• Pepsi (settlement 2012): 3.1M settlement for a policy that allegedly excluded applicants with arrest records

• EEOC v. Kaplan: pending case alleging use of credit caused disparate impact discrimination

• EEOC v. Freeman: pending class action brought by EEOC involving criminal and credit

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Proving Disparate Impact

• Plaintiff must prove the challenged practice or selection device has a substantial adverse impact on a protected group– Typically, this proof is offered through statistical

comparisons, which may be challenged by the defendant

• Employer’s defense is to show that the practice is job-related for the position in question and consistent with business necessity

• Plaintiff may still prevail by showing the employer has refused to adopt an alternative employment practice which would satisfy the employer's legitimate interests without having a disparate impact on a protected class (less discriminatory)

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The Rationale for Disparate Impact

• Statistical evidence shows that African Americans make up a disproportionate number of the total arrests in the US (28.3%) when compared to their share of the total population (12.9%)

• Thus policies that limit employment based on arrests or other criminal history may disproportionately impact African Americans and Latinos because they are over-represented in the criminal justice system

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April 2012: EEOC New Guidance on Use of Criminal Records

Old Guidance:

Green Factors: To prevent discriminatory practices when using criminal records, employers must take into account:

• Nature and gravity of the offense or offenses

• Amount of time that has passed since the conviction and/or completion of the sentence

• Nature of the job held or sought

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April 2012: EEOC New Guidance on Use of Criminal Records

New Guidance:• Greene factors still apply• New guidance starts with a de facto presumption

that use of criminal history has a discriminatory effect.

• New Requirement: “The employer develops a targeted screen considering at least the nature of the crime, the time elapsed, the nature of the job (the Green factors). The employer’s policy then provides an opportunity for an individualized assessment for those people identified by the screen, to determine if the policy as applied is job related and consistent with business necessity.”

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Individualized Assessment

"Individualized assessment generally means that an employer informs the individual that he may be excluded because of past criminal conduct; provides an opportunity to the individual to demonstrate that the exclusion does not properly apply to him; and considers whether the individual's additional information shows that the policy as applied is not job related and consistent with business necessity.”

"The individual's showing may include information that he was not correctly identified in the criminal record, or that the record is otherwise inaccurate."

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Factors to Consider for Individualized Assessment

Factors to consider for Individualized Assessment:1. Facts or circumstances surrounding the offense or conduct2. The number of offenses for which the individual was convicted 3. Older age at the time of conviction, or release from prison4. Evidence that the individual performed the same type of work post-conviction, with the same or a different employer, with no known incidents of criminal conduct5. The length and consistency of employment history before and after the offense or conduct6. Rehabilitation efforts (e.g., education/training)7. Employment or character references and any other information regarding fitness for the particular position8. Whether the individual is bonded under a federal, state, or local bonding program

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And There’s More…Best Practices Identified by the EEOC in the Guidance:• Defer inquiries about convictions until after the application phase. (Ban the Box)• Develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct.• The policy should identify essential job requirements and the actual circumstances under which the jobs are performed.• The policy should determine the specific offenses that may demonstrate unfitness for performing such jobs, and the duration of exclusions for criminal conduct.• Record the justification for the policy, procedures, and exclusions, including a record of consultations and research considered in crafting the policy and procedures.• Train managers, hiring officials, and decision makers on how to implement the policy and procedures consistent with Title VII.

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Huh? SOME PRACTICAL CONSIDERATIONS FOR COMPLIANCE

1. Eliminate policies with blanket exclusions (those that exclude applicants with any criminal record).

2. Review your paper job applications and pre-hire documents. If you are using an ATS or web based applicant entry system, consider whether the forms include inquires about criminal history.

3. Limit inquiries about criminal convictions to those which are job related.

4. While individual assessment is not required by Title VII, the guidance implies that without it, you will have a more difficult defense. No examples are given of a scenario where an employer is successful without individualized assessment.

5. If an individual does not respond to an employer’s request for additional information, the employer can make a final decision without the additional information. How long or under what circumstances an employer must wait is not clear.

6. If you use a third party CRA to conduct criminal screenings, review your packages and their reporting policies to ensure compliance.

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Huh?7. If you use a third party CRA to adjudicate criminal results,

consider building in a review process to comply with the individualized assessment recommendations.

8. Consider FCRA adverse action procedures and ways to incorporate the request for additional information needed for individualized assessments with Adverse Action letters.

9. Note that simply having a reputation for discouraging applicants based on race may invite investigation by the EEOC.

10. Large applicant pools have greater potential for disparate impact, so big employers with high turnover should seek counsel in determining the best means of compliance.

11. Compliance with a Federal law/mandate that conflicts with the Guidance is a defense.

12. State and local mandates are NOT a defense. They are pre-empted by Title VII if they “purport to require or permit the doing of any act which would be an unlawful employment practice” under Title VII.

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Ban The Box

• A movement to prohibit employers from asking about criminal history on the application

• Most laws prohibit asking about criminal history at the application stage

• Traditionally done by eliminating the checkbox on the application “Have you been convicted of a criminal offense?”

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Political Landscape for Ban the Box

• Unprecedented unemployment. Presidential election year. It’s the economy, stupid

• Sympathetic media that exposes the challenges faced by ex-convicts in finding work given the economic climate and criminal past

• Need to integrate ex-offenders into the workplace

• Activist groups mobilized, such as NELP, NCLC

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Rationale for Banning the Box

Proponents Claim:

• Qualified workers are being eliminated prematurely from consideration

• Ex-offenders are being eliminated and cannot find work

• Effect is a “culling” of the applicant pool

• Legal argument for equal opportunity: checkbox can lead to disparate impact discrimination due to the high percentage of minority arrests

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Employer’s Perspective

• Employers want the right to screen who they want, when they want

• Laws are being adopted on both state and local level, increasing the difficulty in compliance

• How to handle doing business in multiple jurisdictions?

• Challenges in adopting policies that will work for all workers, no matter what state/city

• Need to regularly update forms and educate hiring managers and HR

• How to handle contractors, 1099 employees?

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States that Ban the Box

• California • Connecticut • Hawaii • Massachusetts • Minnesota• New Mexico• New York• Pennsylvania• Wisconsin

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Ban the Box: California (2010)

• Ban the Box applies to State Employment only• California State Personnel Board• Standard application does not ask for

information on conviction history• If the applicant is applying for a position “to

which a criminal record is pertinent,” they are required to complete a “Criminal Record Supplement Questionnaire”

• Not all positions or applications require the questionnaire

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Ban the Box: Connecticut (2010)

• Ban the Box applies to State Employment or Licensure• State employers and licensing agencies must wait until a

conditional offer has been made before obtaining a criminal background check

• Requires the state or licensing agency to consider nature of the crime and relationship to the job, rehabilitation information, and the time elapsed since conviction or release before making a decision

• Requires the state or licensing board provide applicant with a written letter of rejection stating the evidence/reason

• Prohibits use of arrest that did not lead to conviction or convictions that have been sealed/erased

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Ban the Box: Hawaii (1998)

• Ban the Box applies to public and private employment

• Prohibits inquiry until after a conditional offer has been made

• Offer may be withdrawn if a conviction bears a “rational relationship” to the duties

• Employers may only consider conviction records within the most recent 10 years

• Use of arrest or court record is defined as a discriminatory practice (HRS section 378-2)

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Ban the Box: Massachusetts (2010)

• Ban the Box applies to employers, volunteer coordinators and professional licensing agencies

• Illegal to request criminal information on initial application form

• Exceptions if there is a state law prohibiting hiring persons with felonies or criminal history

• Employer required to provide a copy of the criminal record if used for adverse decision

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Ban the Box: Minnesota (2009)

• Ban the Box applies to state and local government employees

• Prohibits public employers or licensing agency from inquiring into criminal history until after applicant has been selected for an interview

• Prohibits disqualification for job or license unless conviction is “directly related”

• Set factors for “job relatedness”• Applicant may not be disqualified if they can show

evidence of rehabilitation, and fitness to perform the duties

• Arrests not resulting in convictions cannot be used

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Ban the Box: New Mexico (2010)

• Ban the Box applies to State employees

• Prohibits inquiry on an initial job application

• Applicant’s criminal history may only be considered after “selected as a finalist”

• Convictions may not serve as “automatic bar” to public employment or licensure

• Prohibits use of arrest if not followed by conviction and misdemeanor not involving moral turpitude

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New York (1977)

• Anti-discrimination law applies to private and public employment and licensing

• Prohibits unfair discrimination against persons with previous convictions

• Prohibits disqualification of candidate solely or in part on the criminal history or lack of “good moral character” unless there is a “direct relationship” between conviction and employment or license or would create an unreasonable risk to property, individuals or general public

• Law has list of factors to be considered

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Pennsylvania (1979)

• Limits on use of criminal records applies to private sector

• Prohibition of use of criminal records that “do not relate to the applicant’s suitability for employment”

• Requires employers to provide written notification if a determination not to hire was based whole or in part on the criminal info

• Allows state agencies to consider criminal history for licensure

• Prohibits consideration of non-conviction arrests

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Wisconsin (1981)

• Anti-discrimination law applies to both public and private

• Prohibits employment discrimination in on the basis of arrest or conviction

• Applicant may not be denied employment unless the conviction is “substantially related” to the job or licensed activity

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Local Jurisdictions: “Ban the Box”• Alameda Co, CA

• Atlantic City, NJ

• Austin, TX

• Baltimore, MD

• Berkeley, CA

• Boston, MA

• Bridgeport, CT

• Cambridge, MA

• Chicago, IL

• Cincinnati, OH

• Cleveland, OH

• Cumberland Co, NC

• Detroit, MI

• Hartford, CT

• Jacksonville, FL

• Kalamazoo, MI

• Memphis, TN

• Minneapolis, MN

• Multnomah Co, OR

• Muskegon Co, MI

• New Haven, CT

• New York, NY

• Norwich, CT

• Oakland, CA

• Philadelphia, PA

• Providence, RI

• San Francisco, CA

• Seattle, WA

• St. Paul, MN

• Travis County, TX

• Washington, DC

• Worcester, MA

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Final Thoughts on Ban the Box

• Coming soon to a city or state near you

• EEOC Guidance may set up a de facto “Ban the Box” situation

• If doing business in multiple jurisdictions, be on the watch

• Federal legislation for a nation-wide “ban the box” was introduced 8/2012, but is DOA as the bill’s sponsor just lost his primary

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Fair Credit Reporting Act

Smith v. Capital One, N.A., No. 1:11-cv-03504-RDB (D. Md.). http://www.nka.com/capital-one.

• “Burying” the background check authorization in the job application

• Including extraneous information

• Failing to provide copies of the reports when it used them to take adverse employment actions, such as refusing to hire an applicant, refusing to promote an employee or terminating an employee

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Fair Credit Reporting Act

Singleton v. Domino's Pizza, LLC, 2012 U.S. Dist. LEXIS 8626 (D. Md. Jan. 25, 2012): class action

– ran background checks on employees without proper authorization; and

– “systematically” failed to provide employees with copies of their background checks prior to taking adverse employment action against them.

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Employers Caught in the Middle

• Need to maintain safe workplace

• Threat of negligent hiring, negligent retention lawsuits

• Public interest served in conducting background checks (NASA v. Nelson, US Supreme Ct. January 12, 2011)

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• Avoiding discrimination

• Maintaining appropriate hiring pool

• Federal and state consumer protection laws

• Restrictions on how to conduct appropriate screening, following FCRA, FTC, EEOC

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Final Considerations• Bring together stakeholders in your organization: HR, security,

IT, legal• Audit policies and procedures• Consider incorporating EEOC Guidelines in policies• Avoid “blanket” policies such as an outright ban on a past

criminal record• Match hiring criteria with job descriptions to prove business

necessity and job relatedness (and put these in writing!)• How do you document business necessity?• Review hiring policies for contract workers/temporary

employees• If you are using an outside staffing resource, audit their

practices and review their advertisements

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Thank Youabosworth@employeescreen.com